THE ENTERPRISE
This week is a smorgasbord of topics that seem to be hitting the news, each of which earns a response by either its profound truth or nutty conclusions.
--UPS Earnings are UP--That's Good!
One of my bell-weathers to see how the US economy is doing is UPS (and now FedEx Ground, which is smaller than UPS but growing fast.) The fact that UPS is going strong and predicts that the strength will continue bodes well for the US economy in the near term. Having said that, one negative factor that is hitting all businesses is the oil-driven, fuel based increase in freight costs. These insidious costs sneak up on businesses that are not alert to them and hit the variance line with a resounding "THUD." Pay attention to the impact of freight costs--and at least be forewarned of an ugly "hit."
--The Chinese use a "head-fake" and let the Yuan slide--barely.
The Chinese have finally heard the lunatic fringe of American politics--represented by Senators Charles Schumer and Ted (me drunk?) Kennedy. Their bill to tack a 27.5% tariff on Chinese goods probably would have failed a straight up-down vote (remember those--before phony filibusters, those were called Senate votes). Even so, China was smart. It created a new mystery-market-basket of currencies to peg the Yuan and un-pegged the Yuan to the US Dollar--ever so slightly. 2% (or even if it becomes 5%) won't really affect anything except to cool the jets of the Congressional fanatics who still think you can control US jobs through wage-price controls, tariffs/protectionism, etc. (Weren't you guys around decades ago when that failed?) Chinese companies and US customers will eat the 2% and a 2% stronger Yuan will let the Chinese buy a smidgen better too. Remember Japan 20+ years ago? The more things change, the more they remain the same.
--John Roberts--Bush's Supreme Court Nominee--a "Hard Target"
President Bush finally set aside his macho cowboy persona and nominated someone who shouldn't be particularly offensive to either party's mainstream. Of course, the fact that Bush nominated him will make the NOP (New Obstructionist Party--formerly known as the Democratic Party and its leader, Howard "Arrrrrrggghh" Dean)--livid with rage. How dare a sitting President nominate anyone he wants to the Supreme Court? Really! And someone so young will tie up that seat for decades. That seems like an "Extraordinary" set of objections to many NOP radicals. It's time to toss the "coalition of 7+7 compromise" and force a straight up-down vote like the Constitution specifies. C'mon Dr. Frist--"just do it."
--What the hell do they expect? MORE! It's NUTS!
I read the earnings releases for Yahoo! and Google with confusion, then dismay, then disgust. Yahoo!'s sales were up from $832MM to $875MM a measly 5% on which its earnings soared from $112MM to $192MM, and increase of 71%. The stock dropped 10%. "Analysts were disappointed that it only met its estimate, and maintained its earlier guidance for future periods." What????
The next day Google reported that revenue rose from $700MM to $1.38B, a 97% increase and net income went from 79MM to 343MM, a 434% gain. "But the results failed to meet the lofty expectations of some investors, who were also concerned by the company's warning of a seasonal slowdown in growth." Oh, my God! Do those investors expect continued increases in revenues of 100% and in earnings of 400%. Can they run a calculator and then use their brains long enough to realize that this kind of thinking created the dot-com, Enron and WorldCom debacles.
--NOTE : If anyone wants a lengthy but can't-put-it-down mind-boggling book for a summer read, get CONSPIRACY OF FOOLS--A True Story, by Kurt Eichenwald. It isn't fiction. It's so bizarre that no one could have imagined how the Enron debacle unfolded from its unbelievable growth to its cataclysmic collapse. Its sub-title says it's "true," the the huge list of source materials leads one to believe it is TRUE. The only problem is that you know how it ends.
--The End of an Era
Finally, to end on a more positive note, I want to reflect about the end of another era. I watched the British Open a week ago Friday. It was the final round in a Major for Jack Nicklaus. He shot par 72 on The Old Course at St. Andrews--not too shabby for a 65-year-old with a pair of artificial hips. More important to me, and perhaps to you, too was Jack's career of over 40 years. I've met few top sports figures, but one was Jack--who I met for a brief walk on a new golf course under construction back in the early 1990's. Other than the same surprise everyone feels about his statute--he isn't a large man--and his small (but strong) hands, he was just what I hoped for. A decent guy just out doing his job (that day it was golf-course designer.)
Jack Nicklaus probably isn't perfect in many respects, but as a highly-visible professional athlete who was the top of his field for 2-3 decades, he was--and remains to be--a class act. I am near his age, so his retirement had a special impact on me. His comment "if I can't compete, I don't want to deny the place in the field to someone that can" just said so much about his character. And the fact that the Scotland, a country that is hard to impress except when it comes to golf, would put his likeness on its currency was also an impressive tribute. He was the greatest in his sport--in his era--and maybe in any era.
In an time when we have too few heroes, and when too many of them have values and character that are not nearly comparable to their professional prowess --in sports, entertainment, education, business or government--Jack Nicklaus stands out. And Jack made that last birdie putt too. It seemed fitting that Tiger Woods, the heir apparent won the tournament. Now if only he can live up to Jack's example.
For my closing this week, I want to say, may God bless Jack (and Barbara--his "only" wife) with many years of health and happiness ... because true greatness in any endeavor is only revealed after the test of time.
Best, John
PS: For those who don't know, Jack & Barbara lost a grandson, his son and caddy Steve's 19 month-old-son died in a tragic pool accident this past year. I'm sure that sadness is still with the family.
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